Dubai, Sept. 21 (Reuters): US-controlled Iraq today unveiled sweeping reforms allowing foreign investors into all sectors except oil, ending 30 years of state economic control.
Iraqi finance minister Kamel al-Keylani today said the reforms would “significantly advance efforts to build a free and open market economy in Iraq”, spur economic growth and speed Iraq’s re-entry into the international community.
The list of reforms for liberalising foreign investment, the banking sector and taxes and tariffs read like a recipe devised by Washington for a capitalist Iraq. “Iraq needs jobs, it needs to have growth,” a senior US official involved in Iraq’s reconstruction said. “This isn’t just a proposal — this is the law, this is done. This was all signed yesterday,” the US official said.
Keylani said the reforms would be implemented soon.
The surprisingly broad measures, which end an era of economic domination under Saddam Hussein and the socialist Baath Party, were aimed at improving global opinion before a donors’ conference in Madrid next month.
Washington’s invasion of Iraq in the face of worldwide opposition raised hackles in Europe and concern in Iraq and the Arab world that it sought control of Iraq’s oil and resources.
However, the reforms include 100 per cent foreign ownership in all sectors except natural resources, excluding current outside participation in Iraq’s coveted oil reserves, the second-largest behind those of Saudi Arabia.
“The fact that they ban investment in oil resources is good because it sends the message that America was not only after Iraq’s oil,” an Arab finance minister, who declined to be identified, said of the steps.
Keylani and a big delegation of Iraqi and Coalition Provisional Authority (CPA) officials are in Dubai to discuss an assessment of Iraq’s needs to be presented to donors in Madrid.
Paul Bremer, US-appointed administrator of Iraq, was not present because he was in Washington, a CPA official said. His absence surprised some delegates who had expected him to outline US policy to possible donor nations.
Joe Saba, World Bank country director for Iraq, called the steps “significant”.
Iraq’s reconstruction has been hampered by lawlessness five months after Saddam’s fall and its people are struggling to cope with daily life.
Saba said Iraq’s US-backed Governing Council had supported the measures, an endorsement the CPA has said is essential to attract foreign investors.
A senior Arab official said: “If (the package) is legal and it stands, then it would be excellent but the proof is in the pudding if investors trust it enough to come.”
The US official noted the open-ended foreign investment proposals did not require any screening process — something he said the Iraqis had requested — which would make investment there more alluring to foreigners. “There is no screening committee. There is no way for a sort of niggling process to grab hold of your ankle and chew on it,” he said.
Foreign investors cannot own real estate but can lease property for 40 years under the new rules.
“You can make money in a country like Iraq,” the US official said. “You don’t have to have everything be perfect to make money.”
The reforms also include a free transfer of foreign exchange earnings for investors, full central bank independence and relatively free entry for foreign banks into Iraq.
New bank rules were signed in Iraq yesterday, the US official said. Six foreign banks will get “fast-track” entry into Iraq and full ownership of local banks within five years. “We are going to have a separate and early process to select two of those banks,” he said.